The Federal Reserve just announced an open-ended quantitative easing program that will pump $40 billion a month into the economy in the attempt to stimulate growth. The move is designed to keep borrowed money cheap, and some believe that this will have the effect of keeping mortgage rates low in the coming months.
If you haven’t bought a home, now is a good time to start thinking about it. In many cities in the United States, it actually costs less to buy a home than to rent one. If you are in a good position to buy, you can get a low 30-year rate, and see a very affordable payment.
It’s a good time to buy a home if you are interested in that sort of thing, since you can buy so inexpensively. If you plan to stay put for a while, there are plenty of deals on primary residences. While many debate whether or not a home purchase like this is a true investment, it’s a cheap way to buy a house — whether you view it as a monetary investment or an emotional investment.
You can lock in a low 30-year rate now, or even get a lower rate on a 15-year mortgage. For the home buyer with good credit and a solid financial situation, there are plenty of options. If you have been sitting on the fence about buying, it might be time to get off the fence (if buying fits your lifestyle goals). Home prices have been inching up, but mortgage rates are low enough to make up for that in many cases.
There’s no need to limit yourself to buying a primary residence, though. Plenty of opportunities to buy rental properties on the cheap are available in the current market. If you are looking for a way to improve your cash flow, and if you don’t mind being a landlord, now might be the time to buy an investment property. Rents are relatively high, so there is a good chance that you will be able to have someone else pay your mortgage and pay you a little extra moneyh of top of that. It’s a real possibility that can help you in the long run, providing you with regular income.
You do need to be careful, though. There is a lot that comes with running a rental property. Additionally, some banks might require a larger down payment for your rental property or second property, and you usually have to pay a higher interest rate (although it’s still quite low when compared with rates seen a few years ago). Make sure you have all your ducks in a row before you attempt to buy an investment property.
Even if you don’t plan to buy a property, it’s still possible to take advantage of the current situation. You can refinance your current home loan to a lower rate. If rates tick lower in coming months, so much the better. Unfortunately, there are hurdles that come with refinancing. Home values in my neighborhood have continued to drop due to short sales and other issues. As a result, my home’s value has fallen to the point that refinancing is extremely difficult — in spite of our good credit and solid income.
Refinancing can help you save money over time, since you are paying less in interest, and you have lower payments as a result. At the very least, if it’s possible, try to look for a way to refinance. The current environment offers numerous opportunities to maximize your money, and make good use of your debt situation, as long as you have set yourself up to take advantage of these opportunities.
In order to take care of these opportunities, though, you need to have your finances in order. In order to get the best deals on interest rates and other terms, you need to have good credit, and you need to show that you will be able to handle the payments. It doesn’t do you much good to buy a home if you can’t keep up on the payments. Consider your financial situation before you apply for a mortgage loan, whether you are buying a primary home, an investment property, or refinancing.
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I'm just an average mom, trying to live a frugal life and get out of debt. I write about things that have (and haven't) worked to improve my family's financial situation. What works for me may or may not work for you, and you should always consult a financial advisor before making important financial decisions.
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